Consolidated Financial Results for the Nine Months Ended September 30, 2018 (Japan GAAP) (The fiscal year ending December 31, 2018)

Transcription

1 Consolidated Financial Results for the Nine Months Ended September 30, 2018 (Japan GAAP) (The fiscal year ending December 31, 2018) November 14, 2018 Stock Exchange: Tokyo Head Office: Tokyo Company Name: DIC Corporation Tel: +81 (3) Listing Code Number: 4631 Scheduled Filing Date of Securities Report: November 14, 2018 URL: Representative: Kaoru Ino, Representative Director, President and CEO Contact Person: Hiroshi Nagai, General Manager, Accounting Department Preparation of Supplemental Explanatory Materials: Yes Holding of Quarterly Financial Results Meeting: No (Yen amounts are rounded to the nearest million, except for per share information) 1. Consolidated Financial Results for the Nine Months Ended September 30, 2018 (January 1, 2018 September 30, 2018) (1) Consolidated operating results (The percentages indicate the changes from the same period in the previous year) Net sales Operating income Ordinary income Net income attributable to owners of the parent JPY (million) % JPY (million) % JPY (million) % JPY (million) % September 30, , , , , September 30, , , , , Note: Comprehensive income (JPY million): September 30, ,166 (-78.8%) September 30, ,580 ( %) Earnings per Earnings per share basic share diluted JPY JPY September 30, September 30, (2) Consolidated financial position Total assets Net assets Shareholders' equity ratio to total assets JPY (million) JPY (million) % As of September 30, , , As of December 31, , , Note: Shareholders' equity (JPY million): As of September 30, ,992 As of December 31, , Cash Dividends Cash dividends per share (Record date) End of 1st quarter End of 2nd quarter End of 3rd quarter Year-end Annual JPY JPY JPY JPY JPY FY2017 FY2018 FY2018 (Plan) Note: Revision of the forecasts for the dividends payment: No 3. Forecasts for Consolidated Operating Results for the Fiscal Year Ending December 31, 2018 (January 1, 2018 December 31, 2018) (The percentages indicate the changes from the same period in the previous year) Net sales Operating income Ordinary income JPY (million) % JPY (million) % JPY (million) % JPY (million) % JPY FY , , , , Note: Revision of the forecasts for the consolidated operating results for the fiscal year ending December 31, 2018: Yes For details, please refer to "Analysis of Results of Operations (3) Operating Results Forecasts for Fiscal Year 2018." Net income attributable to owners of the parent Earnings per share basic

2 Notes (1) (2) (3) s in the scope of consolidation for significant subsidiaries during the nine months September 30, 2018: No Adoption of accounting methods which are exceptional for quarterly consolidated financial statements: Yes s in accounting policies and accounting estimates, and restatements 1) s in accounting policies arising from revision of accounting standards: No 2) s in accounting policies other than 1): No 3) s in accounting estimates: No 4) Restatements: No (4) Number of shares issued (common stock) 1) Number of shares issued at the end of the period, including treasury shares As of September 30, ,156,904 shares, As of December 31, ,156,904 shares 2) Number of treasury shares at the end of the period As of September 30, ,346 shares, As of December 31, ,293 shares 3) Average number of shares issued during the period, excluding treasury shares For the nine months September 30, ,646,824 shares, For the nine months September 30, ,738,202 shares * From the second quarter in the fiscal year December 31, 2017, the Company introduced the Board Benefit Trust (BBT). The shares held by the trust are included in the number of treasury shares. Note: Note: Quarterly consolidated financial results are not subject to quarterly review procedures conducted by certified public accountants or audit firms. Explanation of the appropriate use of performance forecasts, and other special items Caution concerning forward-looking statements The above forecasts of future performance are based on information available to the Company at the present time and are subject to potential risks and uncertainty. Accordingly, the users should be aware that actual results may differ from any expressed future performance herein due to various factors.

3 Analysis of Results of Operations (1) Overview of Operating Results Economic conditions worldwide recovered gradually in the nine months September 30, Moderate recovery persisted in the economies of North America and Europe. The shift toward revival continued in Asia. Japan s economy also rallied steadily. In this environment, consolidated net sales increased 3.0%, to billion, reflecting multiple factors, including the revision of sales prices and firm shipments. Operating income declined 10.2%, to 36.4 billion, hampered by rising raw materials prices and higher distribution costs, among others. Operating income was also constrained significantly by such factors as environmental regulations in the People s Republic of China (PRC), natural disasters in Japan and the United States and by foreign exchange losses attributable to the depreciation of currencies in European emerging economies. Ordinary income was down 10.4%, to 36.4 billion, with causes including lower operating income. Net income attributable to owners of the parent fell 36.1%, to 22.4 billion. Reasons behind this result included the decrease in ordinary income and the absence of a one-time decline in tax expenses, which bolstered net income attributable to owners of the parent in the corresponding period of the previous fiscal year. (Billions of yen) September 30, 2017 September 30, 2018 Local currency basis Net sales % 3.4% Operating income % -8.8% Ordinary income % Net income attributable to owners of the parent % /US$1.00 (Average rate) /EUR1.00 (Average rate)

4 (2) Segment Results (Billions of yen) Net sales Operating income (loss) September 30, 2017 September 30, 2018 Local currency basis September 30, 2017 September 30, 2018 Local currency basis Printing Inks % 4.4% % -6.8% Fine Chemicals % -2.9% % -5.8% Polymers % 4.1% % -11.4% Compounds % 0.7% % -26.8% Application Materials Others, Corporate and eliminations % 4.5% % 37.8% (28.8) (25.7) (3.7) (3.9) Total % 3.4% % -8.8% Segment results in key markets are as follows. Year-on-year percentage changes in squared parentheses represent increases or decreases on a local currency basis. Interregional transactions within the Printing Inks segment are included. Accordingly, the aggregates of regional net sales and operating income figures for the Printing Inks segment differ from the figures presented above. 2

5 Printing Inks Japan Net sales 54.8 billion -4.0% Operating income 1.1 billion -60.9% Sales in Japan declined, a consequence of diminished demand for publishing inks, among others. Operating income fell sharply, owing to the aforementioned sales results, as well as to rising raw materials prices, higher distribution costs and other factors. The Americas and Europe Net sales billion 4.3% [6.3%] Operating income 7.0 billion 10.5% [21.7%] Although sales of packaging inks rose, sales in North America were level, owing to waning demand for publishing inks and news inks. In Europe, sales increased, boosted by brisk shipments of packaging inks. Sales in Central and South America were up, buoyed by robust shipments of packaging inks and news inks. As a result, sales in the Americas and Europe advanced, underpinned by an increase in overall sales of packaging inks, among others. Operating income increased, with contributing factors including the aforementioned sales results and expanded sales of security inks. Asia and Oceania Net sales 50.0 billion 4.5% [6.2%] Operating income 2.3 billion -22.1% [-21.4%] Higher shipments of packaging inks and publishing inks bolstered sales in the PRC and Southeast Asia. Sales in Oceania fell, with causes including fading demand for publishing inks and news inks. Sales in India increased in all product categories. For these reasons, overall sales in Asia and Oceania advanced. Operating income decreased significantly, regardless of the aforementioned sales results, a consequence of rising raw materials prices and other factors. 3

6 Fine Chemicals Net sales 99.2 billion -2.9% [-2.9%] Operating income 12.5 billion -4.5% [-5.8%] Sales of pigments were down, despite an increase in shipments of pigments for color filters and effect pigments, among others. Reasons behind this result included a temporary lull in shipments of pigments for cosmetics and flagging demand for other pigments. Notwithstanding expanded shipments, sales of TFT LCs declined, with reasons including falling sales prices. As a consequence, segment sales edged down. Owing to the aforementioned sales results, as well as to the impact of environmental regulations in the PRC, segment operating income decreased. Polymers Net sales billion 4.6% [4.1%] Operating income 12.3 billion -10.9% [-11.4%] Sales of epoxy resins and other products for electronic and electrical equipment advanced both in Japan and overseas. For these and other reasons, segment sales increased. Segment operating income declined, regardless of the aforementioned sales results Factors behind this result included rising raw materials prices. Compounds Net sales 48.5 billion 1.4% [0.7%] Operating income 2.6 billion -25.4% [-26.8%] Shipments of polyphenylene sulfide (PPS) compounds and jet inks expanded steadily. Nonetheless, segment sales were up only slightly, owing to the scaling back of low-margin businesses and other factors. Despite the aforementioned sales results, segment operating income fell sharply, a consequence of rising raw materials prices, among others. 4

7 Application Materials Net sales 42.8 billion 4.9% [4.5%] Operating income 2.5 billion 38.6% [37.8%] Segment sales increased, reflecting higher shipments of industrial adhesive tapes and hollow-fiber membrane modules, among others. Segment operating income rose substantially. Reasons behind this result included the aforementioned sales results. (3) Operating Results Forecasts for Fiscal Year 2018 The Company has revised its operating results forecasts for fiscal year 2018, published on August 9, 2018, as shown in the table below. (Billions of yen) FY2017 FY2018 Local currency basis Net sales [830.0] 3.9% 4.6% Operating income [58.0] -9.7% -7.4% Ordinary income [58.0] -10.5% Net income attributable to owners of the parent [40.0] -9.3% Note: Forecasts in squared parentheses are those published on August 9, Reasons for Revision of Operating Results Forecasts In light of operating results in the nine months September 30, 2018, and its outlook for the last three months of fiscal year 2018, the Company has revised its operating results forecasts for the full term. Rising raw materials prices and the depreciation of currencies in European emerging economies are expected to continue negatively affecting the Company s performance through the final quarter. 5

8 Disclaimer Regarding Forward-Looking Statements Statements herein, other than those of historical fact, are forward-looking statements that reflect management s projections based on information available as of the publication date. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ from such statements. These risks and uncertainties include, but are not limited to, economic conditions in Japan and overseas, market trends, raw materials prices, interest rate trends, currency exchange rates, conflicts, litigations, disasters and accidents, as well as the possibility the Company will incur special losses related to the restructuring of its operations. 6

9 Consolidated Quarterly Balance Sheet (Millions of yen) As of December 31, 2017 As of September 30, 2018 (Assets Current assets Cash and deposits 17,883 80,444 Notes and accounts receivable-trade 226, ,150 Merchandise and finished goods 90,010 97,206 Work in process 9,053 10,244 Raw materials and supplies 58,911 65,250 Other 32,914 33,158 Allowance for doubtful accounts (10,763) (9,965) Total current assets 424, ,487 Non-current assets Property, plant and equipment Buildings and structures, net 92,443 89,865 Machinery, equipment and vehicles, net 70,554 71,770 Tools, furniture and fixtures, net 11,129 10,998 Land 50,307 49,450 Construction in progress 7,244 7,448 Total property, plant and equipment 231, ,531 Intangible assets Goodwill Software 3,837 2,893 Customer-related assets 874 3,752 Other 2,674 8,728 Total intangible assets 7,584 15,424 Investments and other assets Investment securities 76,867 73,720 Net defined benefit asset 33,408 36,976 Other 58,729 56,122 Allowance for doubtful accounts (1,485) (273) Total investments and other assets 167, ,545 Total non-current assets 406, ,500 Total assets 831, ,987 7

10 Consolidated Quarterly Balance Sheet (Millions of yen) As of December 31, 2017 As of September 30, 2018 Liabilities Current liabilities Notes and accounts payable-trade Short-term loans payable Commercial papers Income taxes payable Provision for bonuses Other Total current liabilities Non-current liabilities Bonds payable Long-term loans payable Net defined benefit liability Asset retirement obligations Other Total non-current liabilities Total liabilities Net assets Shareholders' equity Capital stock Capital surplus Retained earnings Treasury shares Total shareholders' equity Accumulated other comprehensive income Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Remeasurements of defined benefit plans Total accumulated other comprehensive income Non-controlling interests 117, ,999 89,062 99,079 60,500 4,793 3,059 7,071 6,225 48,465 53, , ,516 50,000 60, , ,395 22,774 19,422 1,329 1,404 25,095 26, , , , ,635 96,557 96,557 94,445 94, , ,835 (1,828) (1,821) 375, ,016 7,874 5,759 (3) (16) (46,462) (60,632) (22,222) (21,135) (60,813) (76,024) 28,822 28,360 Total net assets Total liabilities and net assets 343, , , ,987 8

11 Consolidated Quarterly Statement of Income (Millions of yen) September 30, 2017 September 30, 2018 Net sales 583, ,748 Cost of sales 447, ,707 Gross profit 135, ,041 Selling, general and administrative expenses Employees' salaries and allowances 31,425 32,484 Provision of allowance for doubtful accounts Provision for bonuses 3,727 3,383 Retirement benefit expenses Other 59,197 60,386 Total selling, general and administrative expenses 95,121 96,629 Operating income 40,555 36,412 Non-operating income Interest income 1,205 2,870 Dividends income Equity in earnings of affiliates 3,116 2,862 Other 1,313 1,215 Total non-operating income 6,014 7,328 Non-operating expenses Interest expenses 2,583 3,847 Foreign exchange losses 1, Other 2,164 2,603 Total non-operating expenses 5,893 7,299 Ordinary income 40,676 36,441 Extraordinary income Gain on sales of non-current assets 411 Gain on sales of investment securities 373 Insurance income 133 Gain on change in equity 544 Total extraordinary income Extraordinary loss Loss on disposal of non-current assets 1,985 1,691 Severance costs 456 1,189 Loss on disaster 405 Early termination fee 376 Total extraordinary loss 2,817 3,285 Income before income taxes and non-controlling interests Income taxes Net income Net income attributable to non-controlling interests Net income attributable to owners of the parent 38,403 34,073 1,472 10,342 36,931 23,731 1,812 1,289 35,119 22,442 9

12 Consolidated Quarterly Statement of Comprehensive Income (Millions of yen) September 30, 2017 September 30, 2018 Net income 36,931 23,731 Other comprehensive income Valuation difference on available-for-sale securities 1,692 (2,166) Deferred gains or losses on hedges 172 (14) Foreign currency translation adjustment (812) (13,822) Remeasurements of defined benefit plans, net of tax 228 1,113 Share of other comprehensive income of associates accounted for using equity method 369 (676) Total other comprehensive income 1,649 (15,565) Comprehensive income 38,580 8,166 Comprehensive income attributable to Comprehensive income attributable to owners of the parent 36,572 7,231 Comprehensive income attributable to non-controlling interests 2,